With a ‘levelling-up’ Whitepaper expected any day, Ben Rogers argues for an approach that works for London and the rest of the UK.

First published in Atherton, G. & Webb, C. (2022)  Levelling Up: What is it and can it work? Centre for Inequality and Levelling Up (CEILUP), University of West London.

What should Londoners make of the government’s levelling-up agenda?  Should we embrace it as an opportunity for a city that has more than its fair share of poverty and disadvantage? Or should we see it as a threat to the funding of a great global city, with all the housing shortages, congestion and inequality that seem to come with that?

My argument is that London has nothing to fear and much to gain from an intelligent levelling-up agenda.  But it does all depend on how that agenda is pursued.

Below I single out four accounts of what of what levelling up means – all of them with some basis in political and in particular government discourse. Two of them, I want to argue, have a lot two recommend them and would be positive for country and capital alike.  One is rather limited in ambition and one simply wrong headed. Neither would be good for London.

A UK of regional power houses.

On one version of levelling-up, it is all about is about narrowing UK’s yawning regional economic divides, by promoting the economic productivity of cities and regions beyond the south east and in particular in the north of England.  Interpreted in this way, levelling up can be viewed as building on George Osborne’s Northern Powerhouse agenda.

This version of levelling-up has much going for it. The UK is highly unusual, among nations of its size and development, in having so much economic strength concentrate in a single mega-region, centred on London. There is lots of evidence that nations with a more balanced economic geography perform better. The regions with the most obvious potential are the Midlands and North of England, with their numerous conurbations, long records of public and private under-investment and correspondingly low productivity. But other city regions could also benefit.

Need this represent a threat to London?  Not at all.  London and the South East, (the London mega-region) is the only part of the country to make a net contribution to government finances. The government will need London firing on all cylinders in order to provide he investment that other regions badly need. And there are good arguments that London would benefit in turn from better performing regions, which could well take some of the growth pressures of the capital and/or enable increased investment in it.

But we also have to recognise that there are versions of this version of levelling-up that would not bode well for London and the South East.  This would be the case, for instance, if government set about cutting funding to the region and directing it elsewhere.  But this would not just harm London, but ultimately other regions as well.  Creating a more balanced regional economy is the work of decades not years, and involves building support for an approach across political and sectoral divides and beyond short term electoral cycles, involving sustained investment in London and other regions, along with a radical programme of devolution.  That seems to be the lesson from places like East Germany and the Basque country, which appear to have successfully re-vivified their once struggling economies. In the words of The Institute of Fiscal Studies, Levelling-up ’will need to be a long-term, multifaceted agenda if it is to succeed where other governments have failed in the past’.

Levelling up on individual inequality

On a second interpretation, levelling-up is about combatting individual disadvantage, whereever it is found, and raising living standards and life-chances for the worst off.  This again has much to recommend it.  And London would certainly be a beneficiary. It has the highest poverty rates, and in particular child poverty rates of any region, and by far the most individuals living in poverty – a function of higher housing and other living costs, which far outstrip any London earnings premium.  Moves to increase the minimum wage – or better still devolve minimum wage policy to the Mayor -and beef up its enforcement, strengthen benefits and spend more of public services on which poor people rely, would certainly benefit London and lead to more funds going to the capital. It would also be a win for racial justice, given the large number of non-while Britons living there.

Levelling up Civic Pride

On a third interpretation, levelling-up is first and foremost about renewing the economic and civic fabric of the country’s smaller ‘left behind’ cities and towns, including former industrial towns in the Midlands and the North, but also rundown seaside towns around the country. This is a positive agenda.  UK Local authorities are underfunded and underpowered by international standards and local places have suffered as a consequence.  To be fair, planning, design and social infrastracture – town centres, parks, streets, libraries, etc – are pretty poor almost everywhere, but no doubt that some towns and small cities have found themselves slipping down a vicious spiral, as weak economies and poor ‘liveability’ have re-enforced each other.

But while investing in and empowering these localities would certainly be a good thing, boosting living standards, well-being and perhaps economic growth, it is not the principal answer to the UK’s large, challenges.  It would be strange if this government’s flagship agenda ended up being about boosting the civic pride and liveability of towns that had once know better times, as important as that is.

Levelling-up public spending

On a final interpretation, levelling-up is all about addressing a perceived in-balance between public spending in the South East and in particular, London, and other parts of the country.  But there is little that can be said in defence of this particular interpretation.

Yes, more public money is spend on London and the South East, than in other parts of the nation – even if some of the claims about this are wildly exaggerated. But this is the pattern with large highly productive cities and regions everywhere.  They require large and expensive public transport systems and other public goods – extra policing for large public events, support for major tourist attracting cultural institutions –  as a condition of their higher productivity. (It is also worth mentioning that some of the extra public spending is paid for by taxes and charges imposed on London businesses and residents, on the grounds that it will improve and address London issues – it would hard to justify simply redirecting the extra taxes that London businesses are paying for Crossrail to other parts of the country.)

Of course those outside the South East might well argue that they would happily accept more public spending as a way of growing productivity.  But that is different argument.  And do those living in rural idyls in Wales, Cumbria or Yorkshire, really want the towers, traffic and long commutes that would justify increased public spending needed to increase productivity to London levels?

Or to put this another way, public spending needs to be justified by reference to need and other factors like productivity, rather than a simple principle of equality. The Peak District no more needs London levels of public transport funding than London needs Peak District levels of agricultural subsidy.

It will be ‘interesting’ to see how the government picks its ways between these versions of levelling-up above.  The choices it makes will be momentous for London but also for the country as a whole.

Photo by Emily Wang on Unsplash